How Tariffs, AI, Data Centers and Social Inflation Are Reshaping Insurance for the Elevator Industry

Navigating a perfect storm

by John Tateossian

The elevator industry operates at the intersection of some of the most powerful economic and technological forces reshaping American business today. Tariffs, global conflict, the explosive growth of data centers, AI and a shrinking skilled labor pool are converging to create a risk environment unlike anything seen in recent decades. For elevator contractors and suppliers, understanding how these forces affect insurance and liability is no longer optional — it is essential to survival.

Tariffs imposed on imported steel, aluminum and electronic components have driven up material costs significantly across the construction and mechanical trades. Elevator systems are material-intensive, and cost increases ripple through every stage of a project — from initial bids to maintenance contracts. When budgets tighten, the temptation to cut corners on safety protocols, training or equipment quality grows. Insurers are watching this dynamic closely, because deferred maintenance and rushed installations are precursors to accidents and claims.

Global conflicts, particularly those disrupting supply chains in Europe and Asia, compound the problem. Specialty parts, microprocessors and drive systems that once arrived in weeks now take months. Delayed parts mean extended timelines, and extended timelines mean more exposure on jobsites — and more opportunity for injury.

Few construction sectors are growing faster than data centers. As AI demands ever-greater computing infrastructure, hyperscale facilities are being built at a remarkable pace across the country, including in Vermont, where power availability, cooler climates and available land are attracting technology investment. Vermont companies — elevator and mechanical contractors and specialty trades — are increasingly winning work in these massive, complex facilities.

Data centers present unique liability challenges. They are multi-story, heavily mechanized environments where elevator and lift systems are critical to operations. The stakes for malfunction are high, and the clients — major technology companies — have legal teams and risk management departments that are extraordinarily aggressive in pursuing claims. An elevator contractor working in a data center environment faces exposure not just from personal injury claims, but from business interruption and property damage claims that can reach staggering figures.

AI is transforming how elevator systems are monitored, diagnosed and maintained. Predictive-maintenance platforms now use sensor data and machine learning to flag potential failures before they occur. This is genuinely promising from a risk management perspective — fewer unexpected breakdowns mean fewer emergency service calls and reduced injury exposure.

However, AI also introduces new liability questions. When an algorithm recommends a maintenance schedule and an accident occurs, who bears responsibility? The elevator company? The software developer? The building owner who relied on AI-generated reports? These questions are only beginning to be litigated, and the legal landscape remains unsettled. Forward-thinking insurers are starting to underwrite AI-related liability as a distinct exposure, and elevator companies would be wise to understand how their policies address it.

The elevator and construction trades are facing a generational workforce crisis. Experienced elevator mechanics are retiring, and the pipeline of trained replacements is inadequate. Companies are hiring newer, less experienced workers and accelerating on-the-job training programs out of necessity. This is not a criticism — it is a reality of the current labor market.

But from an insurance and liability standpoint, workforce inexperience matters enormously. Less experienced mechanics are statistically more likely to be involved in workplace injuries. They are also more likely to make installation or maintenance errors that lead to equipment failures and third-party claims. They are also less likely to know how to fix older equipment they come across on a maintenance or repair job. Insurers evaluate the training programs, supervision ratios and safety cultures of the companies they insure. A company that can demonstrate safety and training programs, mentorship and documented competency assessments will be viewed as a meaningfully better risk than one that cannot.

Despite elevator travel being the safest mode of transportation, workplace injury has always been a major cost driver for the elevator industry. Social and medical inflation are leading to dramatically larger liability claim payouts. Whether because of third-party injuries to the public or other worksite incidents, juries are increasingly sympathetic to plaintiffs — alleging that the elevator contractor should have done more, could have done more and failed in their duty of care. The trend toward so — called “nuclear” jury verdicts, where payouts surpass US$10 million, has been rising steadily since 2015. Combined with medical inflation driving up the cost of treatment, rehabilitation and long — term care, the severity of claims — not just their frequency — has become the dominant concern for insurance companies. For elevator companies, a single serious injury claim can define their loss history for years.

Given these converging pressures, elevator companies cannot afford to treat insurance as a commodity purchase. Having the right insurance company behind you in the event of a claim is as important as the coverage itself. What does “right” mean in practice? It means working with a carrier that understands the elevator industry specifically — one with claims professionals, adjustors and defense attorneys who know how elevator systems work, how they are maintained and how accidents actually happen.

A generic claims team that treats an elevator injury like a slip-and-fall at a retail store can mismanage the defense. Industry — specific expertise allows for faster, more accurate investigation, better expert witness selection and more credible defense narratives. Without it, claims that should be defensible become expensive settlements — and expensive settlements stay on a company’s loss history for five years, driving up premiums and limiting future insurance options. The right carrier does not just write the check; it brings the right people to the table from day one.

Ultimately, no insurance program substitutes for a genuine commitment to safety. Elevator companies that build strong cultures centered on safety — for the public and for their own mechanics — materially reduce their exposure to accidents and liability litigation. This means more than posting policies on a breakroom wall. It means leadership that visibly prioritizes safety, regular training and drills, rigorous pre — job hazard assessments and accountability systems that reward safe behavior.

A mechanic who feels empowered to stop a job when conditions are unsafe is an asset that no policy can replicate. A company known in the industry for its safety record will attract better talent, command better contract terms and receive more favorable treatment from insurance underwriters. In a period defined by economic volatility, technological disruption and an increasingly litigious environment, the elevator companies that thrive will be those that recognize risk management, safety culture and disciplined documentation not as costs — but as their strongest competitive advantages.